LGPC Bulletin 179 December 2018

Transcription

1 Local Government Pensions Committee Secretary, Lorraine Bennett LGPC Bulletin 179 December 2018 Please contact Lorraine Bennett with any comments on the contents of this bulletin or with suggestions for other items that might be included in future bulletins. Contents LGPS England & Wales The LGPS (Miscellaneous Amendment) Regulations 2018 LGPS Scotland Pension credit members - death grants Aggregation of concurrent employments Consultation on the draft LGPS (Miscellaneous Amendments) (Scotland) Regulations 2019 HMRC Scheme pays and payments on account Questionnaire on AFT return and event report Countdown bulletin 40 HMT Indexation of public service pensions DWP Review of the earnings trigger for automatic enrolment Automatic enrolment evaluation report 2018 Pensions Dashboards consultation Other News and Updates Technical group minutes published New TPR Chief Executive Antony Arter reappointed as the Pensions Ombudsman Consultation on changes to TPO The Pensions Ombudsman Service (TPOS) newsletter GMP reconciliation civil service pension schemes Wider Landscape DWP consultations LGPS NI consultation on rectification of the cost cap floor breach NHS pension scheme consultation No-deal Brexit pensions guidance issued Review into the handling of women s state pension changes granted Pension cold calling ban receives parliamentary approval Legislation Useful Links Local Government Association, 18 Smith Square, Westminster, London, SW1P 3HZ

2 LGPS England & Wales The LGPS (Miscellaneous Amendment) Regulations 2018 [SI2018/1366] The above regulations were laid before parliament on 18 December 2018 and come into force on 10 January 2019, with the exception of: regulation 4 - which has effect from 17 April 2018 regulation 5 which has effect from: o 5 December 2005 in respect of a surviving civil partner of a member; and o 13 March 2014 in respect of a surviving spouse of a same sex marriage with a member. The regulations amend the LGPS 2013 Regulations and the LGPS (Transitional Provisions, Savings and Amendment) Regulations MHCLG also published their response to the consultation on 18 December We were expecting regulation 4 (a technical amendment to deliver the policy intent for deferred members of the 1995 scheme to be able to access their benefits without their employer s consent from age 55) to take effect from 14 May 2018, as this is the date the original policy change took effect by virtue of the LGPS (Amendment) Regulations 2018 [2018/493]. MHCLG have confirmed that whilst they appreciate it would have been more appropriate for regulation 4 to take effect from 14 May 2018 they are of the opinion that the alternative date will not cause any significant issues. We will review the regulations in the coming weeks and publish an impact analysis and an updated survivor benefit table in January. The timeline regulations will also be updated in January. The national Communications Working Group will discuss communicating the changes to scheme members at their next meeting on 15 January We will update all administering authorities accordingly after the meeting. LGPS Scotland Pension credit members death grant Both the LGPS (Scotland) 2014 and 2018 Regulations provide that where an active member dies a death grant is payable of three times the assumed pensionable pay, or if higher, the aggregate of the amount of any death grants payable under regulation 41 (deferred and pension credit members) and regulation 44 (pensioner members). This means that only one death grant is payable where an active member dies in service and also holds a separate entitlement in respect of a pension credit awarded under either the 2014 or 2018 regulations. However, where a pension credit was awarded under the 1998 or 2008 regulations the pension credit death grant is payable in addition to any death in service grant. SPPA have confirmed that the position under the 2014 and 2018 does not deliver policy intent and that the pension sharing on divorce credits, and the pension rights derived from them, must be treated separately from benefits derived directly from membership of the LGPS. The two separate streams of pension rights have been 2

3 accrued and awarded under distinct circumstances: membership of an occupational pension scheme and by a court order. SPPA have confirmed that they intend to amend the regulations to permit the payment of two death grants where the deceased was both an active member and a pension credit member and the pension credit was awarded under the 2014 or 2018 regulations. However, if in the meantime, any Scottish funds encounter a case, the fund should seek direction from SPPA on a case-by-case basis. Aggregation of concurrent employments SPPA have confirmed that they intend to amend the regulations to deliver policy intent where a member leaves a concurrent employment and aggregation of final salary membership takes place. Currently where a member holding concurrent employments leaves one of those employments, there is an issue where the: initial employment began before 1 April 2015 and ceased after that date, and continuing employment began on or after 1 April 2015 and whilst the person was still in the initial employment. Regulation 10(8) of the LGPS (Transitional)(Scotland) Regulations 2014 only addresses those cases where both employments commenced before 1 April In these cases, where a member leaves active membership in a concurrent employment and the benefits are aggregated with the continuing employment, administrators are required to apply an adjustment to the pre-1 April 2015 final salary membership. However, where the continuing employment is in relation to an employment that commenced on or after 1 April 2015, no such adjustment is required. This means that pre-1 April 2015 final salary membership is aggregated on a day-for-day basis. SPPA have confirmed that the policy intent is that any pre-1 April 2015 final salary membership should be adjusted when adding it to the membership in the continuing employment. They have confirmed they intend to amend the regulations when the LGPS Transitional Provisions and Savings)(Scotland)Regulations 2014 are updated; this will be in the New Year. Consultation on the draft LGPS (Miscellaneous Amendments) (Scotland) Regulations 2019 SPPA have published the above consultation seeking comments on the draft miscellaneous amendments to the LGPS (Scotland) Regulations These regulations correct a number of referencing errors and ensure that the provisions in the LGPS (Transitional Provisions and Savings)(Scotland) Regulations 2014 continue to have effect in the 2018 scheme. The consultation will run until Monday 11 March

4 HMRC Scheme pays and payments on account On 4 December, Lorraine Bennett forwarded an from HMRC concerning the payments made by administrators in respect of the annual allowance charge. HMRC confirmed: Where an AFT return has been submitted that includes an annual allowance charge, the scheme administrator will be provided with a charge reference which they should use when making payment. This will ensure the payment is automatically allocated against the correct account and charge. Where an administrator is making a payment on account in advance of receiving the charge reference, the reference they should use is the scheme s PSTR (pension scheme tax reference). They should NOT use the name and/or national insurance number (NINO) or unique taxpayer reference (UTR) of the individual whose charge the scheme is paying. If any sub-scheme administrator has paid an annual allowance charge quoting the individual s NINO and/or UTR as a reference, can they please send me (David Roper) an with details at their earliest opportunity, i.e. the name/nino of the individual, the amount and the AFT return period the charge relates to. Questionnaire on Accounting for Tax (AFT) return and event report On 13 December, Jayne Wiberg forwarded an from HMRC with a subject line of update on reporting non-taxable death benefits, Scottish Budget 2018 and Questionnaire on AFT and event report. In the HMRC ask that funds complete a questionnaire on how the AFT and event report might look in the new Manage and Register Pension Scheme service. See the recent Manage and Register Pension Schemes service newsletter December 2018 for more information. The questionnaire is attached to this bulletin as appendix 1. Additionally, if you are interested in taking part in user research on these subjects, you can HMRC at pensions.businessdelivery@hmrc.gsi.gov.uk and put Manage and Register Pension Schemes service user research in the subject line of your . The information regarding reporting non-taxable death benefits and tax relief at source in the of 13 December does not apply to the LGPS so is to be ignored. Countdown bulletin 40 On 19 December, HMRC published countdown bulletin 40 that includes articles on: Scheme Financial Reconciliation Contributions Equivalent Premium guidance Shared Workspace Clerical Scheme Reconciliation Service (SRS) SRS Stalemate Queries 4

5 Of particular interest is the article on Scheme Financial Reconciliation. If an administering authority is in deficit when HMRC run their final refund and billing exercises run in April 2019, they will issue a bill to the Pension Scheme Administrator (PSA) address according to HMRC records. If they do not receive payment, they will enforce liability in scheme, for any Contributions Equivalent Premiums (CEP) that are still unpaid. We encourage all administering authorities to request their financial position from HMRC and balance their liabilities to ensure that their records are correct. HMT Indexation of public service pensions On 4 December, HMT issued an updated direction (dated 3 December 2018) under Section 59A of the Social Security Pensions Act 1975 which replaced the direction issued on 6 April 2016 and is backdated to that same date. The direction continues existing indexation provisions and, as a result of HMT s 2017 consultation on GMP indexation and equalisation, extends the arrangements to some additional groups of pensioners and provides for the payment of increases to survivors whose SPa is after 5 April The Secretariat is in the process of reviewing the impact of the updated direction and will issue guidance for administering authorities in the New Year. DWP Review of the earnings trigger and qualifying earnings band for 2019/20 On 4 December, the government published its annual review of the earnings trigger and qualifying earnings band for auto enrolment into a workplace pension. The review concludes that the existing threshold of 10,000 remains the correct level at this point in the establishment of auto enrolment and will not change for 2019/20. This represents a real terms decrease in the value of the earnings trigger when assumed wage growth is taken into account and will bring an additional 40,000 individuals into the target population. Automatic enrolment evaluation report 2018 On 18 December, the government published the automatic enrolment evaluation report 2018 which evaluates the implementation of auto enrolment into workplace pensions by bringing together the latest evidence and new analysis to show what has happened to workplace pension membership and contributions since auto enrolment began. Pensions Dashboards The results of a feasibility study to explore the options for the delivery of online pensions dashboards were released in the form of a government consultation on 3 December The consultation is seeking views on how the government can best facilitate an industry-led delivery of pensions dashboards. The consultation closes at 11pm on 28 January The consultation proposals include: a non-commercial dashboard be hosted by the Single Financial Guidance Body (SFGB) together with multiple commercial dashboards hosted by 5

6 different organisations, in order to improve consumer choice and enable them to use the dashboard that most suits their needs. the establishment of a delivery group convened and stewarded by the SFGB, which would work towards the successful implementation of the technology that will allow pensions dashboards to operate. a single Pension Finder Service (PFS) will act as a search engine to find pension schemes linked to an individual. state pension data will ultimately be part of the service. with the consent of the individual, pension schemes will be required in legislation to provide an individual s data via pensions dashboards. public service pension schemes be given longer lead-in times to prepare their data prior to on boarding. It is expected that the pensions industry will start to supply data to a dashboard, on a voluntary basis, from The majority of schemes will be on-boarded within 3 to 4 years from the first dashboards being available to the public. Other News and Updates Technical group minutes published The minutes of the meeting held on 11 December are now available on and Items of discussion include: transfers out and requests for information from claims management companies an update on extending the uses of the NI database the requirement under the LGPS 2013 Regulations to pay a refund within 5 years of the date of leaving aggregation where a member leaves a concurrent employment. establishment of sub-groups to review future legislation New TPR Chief Executive On 18 December, the Pensions Regulator (TPR) announced they have appointed Charles Counsell as their new Chief Executive. Charles Counsell is currently Chief Executive of the Money Advice Service and will join TPR at the start of April following the departure of Lesley Titcomb at the conclusion of her term as Chief Executive at the end of February. Antony Arter re-appointed as the Pensions Ombudsman On 17 December, DWP announced that Anthony Arter has been re-appointed as the Pensions Ombudsman for a further two years until 31 July Consultation on changes to TPO On 19 December, the government published a consultation seeking views on proposals for a new function at TPO for the earlier resolution of disputes prior to a determination; allowing employers to make complaints or refer disputes to TPO on behalf of themselves and associated signposting provisions. The consultation closes at 11pm on 18 January The Pensions Ombudsman Service (TPOS) newsletter TPOS have published the fifth of their stakeholder newsletters, which is attached to this bulletin as appendix 2. 6

7 Civil Service Pension Schemes - GMP reconciliation The Cabinet Office has published the Civil Superannuation annual accounts for Within those accounts (paragraphs 1.65 & 1.66) there is a summary of the contracting-out reconciliation exercise. Of particular interest to administering authorities may be the information and approach regarding the rectification and nonrecovery of overpaid pensions in paragraph 1.66: A number of over and under-payments have been identified in the GMP reconciliation exercise and will be corrected as part of a GMP rectification exercise, which will start in mid-2018 and conclude in mid The total value of underpayments is estimated to be 200,000 and the total value of over-payments is estimated to be 22m. Under-payments will be corrected and paid to members and over-payments will be written-off, consistent with the approach across the rest of the public sector. In all cases, pensions going forward will be adjusted to the correct level. Wider Landscape DWP consultations On 14 December, GAD published a technical bulletin providing a summary of three pensions consultations recently published by DWP, one of the consultations being the pensions dashboards. The other consultations are delivering collective defined contribution (CDC) pension schemes and consolidation of defined benefit schemes. LGPS NI - consultation on rectification of the cost cap floor breach The Department for Communities in Northern Ireland have opened a consultation (closing date 15 February 2019) on the rectification of the cost cap floor breach in the LGPS Northern Ireland. This consultation seeks comments on the recommendation agreed by the Local Government Pension Scheme Advisory Board to rectify the cost cap floor breach. The recommendation is for: the member accrual rate to move from 1/49 to 1/43.5, and the survivor accrual rate to move from 1/160 to 1/142. NHS pension scheme consultation published The Department of Health and Social Care has published a consultation setting out proposals to change NHS pension scheme regulations together with draft regulations. The proposals include a new contribution rate of 20.6% for employers from 1 April 2019 and providing civil partners and same sex spouses with the same survivor pension rights as widows. In addition, the consultation notes that the cost cap floor has been breached and that the rectification process is underway, with discussions ongoing between the Department of Health and the NHS Scheme Advisory Board. It confirms that if no agreement is reached, then a default measure will be applied which will improve the accrual rate to 1/48.1th from 1 April

8 The consultation closes at 11:59pm on 28 January No-deal Brexit pensions guidance On 18 December, the government published two sets of guidance explaining the rights of EU citizens in the UK, and UK nationals in the EU, to benefits and pensions in the event of a no-deal Brexit. Review into the handling of women s state pension changes granted On 6 November, the SPA for women rose to 65, marking the equalisation of the male and female pension ages. On 30 November, a High Court judge granted a judicial review into how the government handled the raising of the pension age from 60. The campaign group BackTo60 brought the case, they are calling for all women who were born in the 1950s to be given the same amount of state pension as they would have received had it started at the age of 60. Pension cold calling ban receives parliamentary approval Regulations to implement a ban on pensions cold-calling were approved without a vote by Parliament yesterday. The ban was initially due to be introduced by June 2018 after amendments were made to the Financial Guidance and Claims Bill but its implementation was delayed while the Treasury consulted on technicalities. It has now become law under the Electronic Communications (Amendment) (No 2) Regulations 2018, which are expected to be effective at the start of next year. Legislation United Kingdom SI Reference Title 2018/1396 The Privacy and Electronic Communications (Amendment) (No 2) Regulations /1366 The Local Government Pension Scheme (Miscellaneous Amendment) Regulations /1330 The Financial Guidance and Claims Act 2018 (Commencement No 5) Regulations 2018 Useful Links LGA Pensions page LGPS member website (England and Wales) LGPS 2015 member website (Scotland) LGPS Advisory Board website (England and Wales) LGPS Advisory Board website (Scotland) LGPS Regulations and Guidance website (England and Wales) 8

9 LGPS Regulations and Guidance website (Scotland) Public Sector Transfer Club Recognised Overseas Pension Schemes that have told HMRC that they meet the conditions to be a ROPS and have asked to be included on the list. LGPS pensions section contact details If you have a technical query, please query.lgps@local.gov.uk and one of the team s LGPS pension advisers will get back to you. Jeff Houston (Head of Pensions) Telephone: jeff.houston@local.gov.uk Lorraine Bennett (Senior Pensions Adviser LGPC Secretariat) Telephone: lorraine.bennett@local.gov.uk Jayne Wiberg (Pensions Adviser LGPC Secretariat) Telephone: jayne.wiberg@local.gov.uk Karl White (Pensions Adviser (Training) LGPC Secretariat) Telephone: karl.white@local.gov.uk Bob Holloway (Pensions Secretary LGPS Scheme Advisory Board (E&W)) Telephone: robert.holloway@local.gov.uk Liam Robson (Pensions Analyst LGPS Scheme Advisory Board (E&W)) Telephone: liam.robson@local.gov.uk Elaine English (LGPS Executive Officer) Telephone: elaine.english@local.gov.uk Distribution sheet Pension managers (internal) of administering authorities Pension managers (outsourced) and administering authority client managers Local Government Pensions Committee Trade unions CLG COSLA SPPA Regional Directors 9

10 Private clients Copyright Copyright remains with Local Government Association (LGA). This Bulletin may be reproduced without the prior permission of LGA provided it is not used for commercial gain, the source is acknowledged and, if regulations are reproduced, the Crown Copyright Policy Guidance issued by HMSO is adhered to. Disclaimer The information contained in this Bulletin has been prepared by the LGPC Secretariat, a part of the Local Government Association (LGA). It represents the views of the Secretariat and should not be treated as a complete and authoritative statement of the law. Readers may wish, or will need, to take their own legal advice on the interpretation of any particular piece of legislation. No responsibility whatsoever will be assumed by the LGA for any direct or consequential loss, financial or otherwise, damage or inconvenience, or any other obligation or liability incurred by readers relying on information contained in this Bulletin. Whilst every attempt is made to ensure the accuracy of the Bulletin, it would be helpful if readers could bring to the attention of the Secretariat any perceived errors or omissions by ing Lorraine Bennett 10